Why Are We Having a Debt Ceiling Debate?
The only reason we are in this mess is because our Government spends more than it takes in.
The Federal Government treats the American capitalistic system as though it is their personal cash cow. They are not interested in finding a way to make the system work better, they are bent on forcing the system to pay for things that do not produce growth. The things they want to spend money on are things that are parasitical. The blood of this capitalistic driven economy is being sucked out at rate far above %100. The transfusion of taxpayer dollars is not finding benefactor “inside” its system. The blood flow is much greater than what the system can replace. Death is eminent.
It is so obvious and quite telling when you look at what has happened in Greece. The government spends more then the economy can generate. The EU comes to the rescue and wants to loan them money to get them out of trouble. But because they are a member of the EU and their currency is in Euros, they can’t raise the debt ceiling, borrow more, spend more or print more money. So the EU wants to help them correct the situation but wants them to make drastic cuts to bring them back in balance. What a novel idea. Sounds like 2 “Cs” and a “B” or “Cut, Cap and Balance.” Since we are always saying we ought to be more like Europe, here is our chance. Why don’t we place ourselves under that criteria and take the drastic cuts necessary to correct our debt woes.
Granted, our economic structure is somewhat different primarily because it is designed to operate in a free flowing environment. But that does not work well when those in the system can’t figure out what the Government, which is outside the system, is going to do to fix its debt problem. Those in the system can’t figure out what their tax liability might be a year down the road. Business plans inside the system have short, middle and long term goals. The mid term goals are around 5 years out and that is the lead time necessary to make significant manpower changes. Manpower stability is paramount in maintaining a stable business growth plan. It is also the most expensive since payroll, training and infrastructure require careful planning. Staying within budget is always priority one.
Most of us took some sort of economics or business related class our first year of college. Unfortunately, those types of classes are looked at as filler toward an unrelated degree program like “Liberal Arts.” Why don’t we have “Conservative Arts?” Additionally, regardless of what the degree program might be, just about everyone spends the first year devoting 24 hours a day to mastering the art of drinking and improving their sociology skills. So the truth is they must have just forgot the supply and demand part. Our economic system has always been based on capitalism and ebbs and flows are its intrinsic nature . It is a dynamic system that is rapidly going global. And no one is going to stop it. Supply and demand is at its core. As long as humans have this insatiable need for all kinds of stuff, the system will march on. As an example; currently, everyone has to have a cell phone; the I-Phone 5, is the current craze. And the need to change to a smaller, more compact and faster phone is tremendous demand. Everyone, globally speaking, has to have what everyone else has. Oops, now I need 4 Gs.
Let’s focus on supply and demand again. The two sides of the equation are not perfect but they always find a level balance. If there is a demand then someone is going to find a way to deliver it at the most reasonable price which is dictated by the level of demand. If there is no demand then a sale will not happen. It doesn’t make sense to spend $5 to get something up and running that will only sell for $4. You cannot afford the production costs and expenses. One of those major expenses is payroll. To meet a demand a entity needs to present an acceptable plan to a lender and convince them that they will gain from their investment of capital. There also needs to be a stable currency system to support the smooth exchange of goods and services. It would be difficult for John Edwards to take his cow named bossy, into a barbershop to exchange her for a haircut. (With the price of his haircuts, he may need to bring the whole herd. He uses dollar bills. Simple pieces of paper that we all “trust” and accept as payment. Credit cards are just another form of dollars with a borrowing feature. But the bank will limit your borrowing capability based on your ability to pay it back.
Everybody has a budget. Even those living in a box on the street have a budget. They beg borrow and even steal to get enough to live on. But no one is going to loan them money on credit. So they have to live within their means. We all have a budget to live by and follow. If we overdraw to the point were we can’t pay it all back, the system has a loop hole. Bankruptcy. That hurts the system because the lose will have to find its way back in to higher prices. It levels itself out and we can account for it within reasonable, acceptable standards. It is a reasonable price for doing business.
What is the lesson to be learned here? Let’s say a normal citizen has credit card debt that becomes excessive. The bank or credit card company see this and will gradually reduce your credit limit as you pay the debt down. That means you are not able to borrow as much as times passed. Secondly, if you do not pay your debt on time, the creditor will raise your interest rate. You will also at the same time, get a lower credit rating on your worthiness. It can get out of control quickly. You will need a new job, a better job, two jobs or you will have to rob a bank. I don’t recommend the last option because you will end up with a brand new orange suit, 3 hots (that’s hot meals) and a cot in a room with pretty bars in the punk rock Gothic style; it improves your opportunities in being the recipient of sex and a sore butt to boot. Just say no!
Our government wants just the opposite. They want more spending availability by raising the debt limit rather than being their own creditor by lowering it. They want to go to their employer, US Citizens, and ask for more money to help them pay for more overspending. But they don’t really ask. They spend money they don’t have so they can come back to the well to get more. If they don’t spend what they have may have to cut. They demonstrate a need with no demand. They increase the limit when they get behind so they can continue on their excessive spending spree. This make Imelda Marcos and her shoes look like the Congress. No limits. This government is suppose to govern and that includes the country’s purse strings. I have heard this story before. It is called “the mob.” Isn’t it interesting that this government loves unions? So did the mob. But even the mob gave you an offer couldn’t refuse. It was shut up or pay up. Our government does it a little bit differently. It is pay up and shut up. and by the way, our government hasn’t passed a budget in 3 years; so they manage to get money the old fashioned way; the “Un-budget for it.
“Poppa G’s got a brand new bag” full of our money! But that ain’t luck, that’s theft!